Reaching the end consumer: Retail sector Flashcards
1
Q
Reaching the end consumer: Retail sector
Supermarkets
A
- Examples: US Walmart, the South African Woolworths, the French Carrefour or the British Tesco
- attractive option for producers wanting to sell large volumes of wine
- generally stock wines from well-known and popular regions and/or grape varieties, made in a style that appeals to a wide range of customers, many of whom have little wine knowledge
- stock wines bottled under labels exclusive to them to avoid customers comparing prices / supermarket may have created the label and the brand altough name does noit appear prominent (walmart, Costco, Marks & Spencer)
- supermarket own-brand range of wines (that clearly display supermarket’s name: Saisbury’s taste the difference)
- high levels of market exposure / sometimes in more than one country
- Has enormous negotiating power = producers typically get less money
- Producers are typically expected to pay fees to have their wine stocked, for additional promotion, desirable product placement in the shop, coverage in supermarket’s magazine
- Wine can be delisted at any time if expected sales are not met
2
Q
Reaching the end consumer: Retail sector
Deep Discounters
A
- Like a supermarket but sells at lower price
- Examples: Aldi (germany) / Lidl (germany) / Netto (Denmark) / Trader Joe (USA)
Can charge low prices by keeping their costs down by:
- lower profit margin (relying on the volume of sales)
- Basic shops / Low rent (away from prime locations)
- Limited product range
- Rarely stock major brands (too expensive)
- Often buy directly from producers
3
Q
Reaching the end consumer: Retail sector
Convenience Retailers
A
- Example: 7-Eleven (USA) / Spar
- May be independently owned
- Stocks brands popular with theuir local customers
- similar/smaller range than those of the supermarkets
- may have their own exclusive brands
- Usually more expoensive than supermarkets (because of smaller premises = rent proportionatley higher)
- open for longer, sometimes 24H
- closer to where people lives
- franchise arrangement = operator has to pay a fee to the franchise owner
4
Q
Reaching the end consumer: Retail sector
Specialist Wine retailers
A
- specialise in wine (sometimes premium spirits and beers / cheese and delicatessen foods)
- larger chains (e.g. Majestic Wine in the UK or Total Wine & More in the USA) / independently owned / part of a small chain
- Some specialise in particular styles of wine, such as organic, biodynamic and natural wines (e.g. Les Caves de Pyrène in the UK )
- well-known specialist retailers (Berry Bros & Rudd and Hedonism in the UK or Millesima in Bordeaux (premium and super-premium wines)
- less purchasing power than large retailers = tend to focus on small producers = very attractive option for producers
- High involvment consumers = consumers more interested in wine = willing to pay more per bottle = wine generally sold at higher price
- knowledgeable and well-trained staff = able to “hand-sell” the wine (tell the story, create a relationshiop with customers)
5
Q
Reaching the end consumer: Retail sector
Hybrids
A
- Specialist wine retailer with a bar area where customers can drink the wine they buy in the shop (at a higher price)
- usually also sell food
- customer can try the wine before buying it
- offer a regualr-changing selection of wines by the glass (good way to showcase new wines and less well-known regions or grape varieties
- requires additional staff to serve customers / longer hours (open later into the evening)
- additional bureaucracy involved in opening premisis in which people can eat and drink
6
Q
Reaching the end consumer: Retail sector
Online Retailing
A
- significant growth in online retailing (varies by country: 20% of total wine sales in China / 2% in the USA)
- ‘bricks- and-mortar’ retailers = both online and shop
- “click and collect” option
- online-only, or predominantly online, retailers (Laithwaite’s in UK) / Wine Apps / wine clubs set up by newspapers (Sunday times / NY Times)
- some require a minimum number of bottles per order
- no need for expensive retail shops / stock has to be stored in warehouses (in lower costs areas)
- Expense of delivery / burden of damaged or lost wine
IMPORTANT = have an easy-to-use, reliable website that makes it easy for customers to browse their wine selections and place orders / offer pairings / suggestions for new wines that the customer might like according to previos purchases, searches
7
Q
Reaching the end consumer: Retail sector
Global travel retail
A
- located in places where customers are travelling from one country to another (airports, sea ports, international railway stations and onboard ships)
- customers look for high-quality and high-priced goods that they cannot find in their home market
- retail space cost is high
- lower profit margins compared to other routes to market
8
Q
Reaching the end consumer: Retail sector
Wine investment companies
A
- Companies that specialise in sourcing and selling wine for investment.
- Bordeaux premier cru classes / Burgundy grand cru / Top Nap[a Valley
- Rarity value = extremely high prices
- Specialist wine retailers are allowed a small allocation of some of these wines
- Other companies act as BROKERS = charge commission on particular wines sales
9
Q
Wine investment trade
A
- Until 2010 dominated by Bordeaux
- Now also Burgundy, Piedmont, Tuscany, California and Champagne
- Some country are only represented by a couple of wineries (Australia = Henschke / Penfolds)
- Exclusive wine clubs (Screaming Eagle / Harlan) = wine investment
- Trading exchanges (Liv-Ex in London) = for retailers and brokers to find clients
- Companies that manage the wine portfolio of their clients (Amphora Portfolio Management and Cult Wines) = sourcing and selling
- Managed wine investment funds = investors can buy into without needing any knowledge of wine (Sommelier Capital Advisors based = USA)
- London and Hong Kong = hubs of wine investment worldwide
